Exam 6: Estimating the Costs of Products and Inventory

Job-cost records for Boucher Company contained the following data: Required: a.Compute WIP inventory at 30 June. b.Compute finished goods inventory at 30 June. c.Compute cost of goods sold for June. _____________________________________________________________________________________________ _____________________________________________________________________________________________

In the weighted-average costing method,the costs of direct materials in beginning inventory are not included in the cost per unit calculation since direct materials are added at the start of the production process.

To calculate weighted-average conversion cost per equivalent unit,you divide total conversion costs to date by total equivalent units of work done to date.

Answer the following questions using the information below: Queanbeyan Company incurred fixed manufacturing costs of $7200 during 2018.Other information for 2018 includes: The budgeted denominator level is 800 units. Units produced total 1000 units. Units sold total 950 units. Beginning inventory was zero. The fixed manufacturing cost rate is based on the budgeted denominator level.Manufacturing variances are closed to cost of goods sold. -Under absorption costing,fixed manufacturing costs expensed on the income statement (excluding adjustments for variances)total:

An updated costing system should:

A ________ links an indirect cost to a cost object.

A major advantage of the weighted average process costing is that it provides managers with information about changes in the costs per unit from one period to the next.

Answer the following questions using the information below: Sunny Company makes gas pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labour-hour.The following data are obtained from the accounting records for June 2018: Direct materials \ 280000 Direct labour (7000 hours @ \ 11/ hour) \ 77000 Ind irect labour \ 20000 Plant facility rent \ 60000 Deprecia tion on plant machinery and equipment \ 30000 Sales commissions \ 40000 Administrative expenses \ 50000 -Proration is the spreading of underallocated or overallocated overhead among ending work in process,finished goods,and costs of goods sold.

Peterson's Plastic Products Company makes rainwater tanks and applies manufacturing costs to production at a budgeted indirect-cost rate of $8 per direct labour-hour.The following data are obtained from the accounting records for June 2018: Direct materials \ 400000 Direct labour (8000 hours @ \1 1/hour) \ 88000 Ind irect labour \ 10000 Plant facility rent \ 50000 Deprecia tion on plant machinery and equipment \ 20000 Sales commissions \ 30000 Administrative expenses \ 40000 Required: a.What actual amount of manufacturing overhead costs was incurred during June 2018? b.What amount of manufacturing overhead was allocated to all jobs during June 2018? c.For June 2018,was manufacturing overhead underallocated or overallocated? Explain. _____________________________________________________________________________________________ _____________________________________________________________________________________________

The ________ approach adjusts individual job-cost records to account for underallocated or overallocated overhead.

Marv and Vicki own and operate a vegetable canning plant.In recent years,their business has grown tremendously and,at any point in time,they may have 30 to 35 different vegetables being processed.Also,during the peak summer months there are several thousand bushels of vegetables in some stage of processing at any one time.With the company's growth during the past few years,the owners decided to employ an accountant to provide cost estimations on each vegetable category and prepare monthly financial statements.Although the accountant is doing exactly as instructed,Marv and Vicki are confused about the monthly operating costs.Although they process an average of 50 000 canned units a month,the monthly production report fluctuates wildly. Required: Explain how the production report can fluctuate wildly if they process a constant amount of vegetables each month. _____________________________________________________________________________________________ _____________________________________________________________________________________________

Transferred-in costs are incurred in previous departments that are carried forward as the product's cost as it moves to a subsequent process in the production cycle.

The weighted-average process costing method does not distinguish between units started in the previous period but completed during the current period and units started and completed during the current period.

FIFO Aluminium processes a single type of aluminium.During the current period the following information was given: Units Material Costs Conversion Costs Beginning Inventory 3000 \ 4500 \4 800 Started During the Curent Period 20000 48000 65000 Ending Inventory 2500 All materials are added at the beginning of the production process.The beginning inventory was 30% complete as to conversion,while the ending inventory was 40% completed for conversion purposes. FIFO Aluminium uses the first-in,first-out system of process costing. What were the costs assigned to the units transferred out this period (round equivalent unit cost to the nearest cent)?

What is the assignment of direct costs to a cost object called? Variant question

Answer the following questions using the information below: Sunny Company makes gas pipes and applies manufacturing overhead costs to production at a budgeted indirect-cost rate of $15 per direct labour-hour.The following data are obtained from the accounting records for June 2018: Direct materials \ 280000 Direct labour (7000 hours @ \ 11/ hour) \ 77000 Ind irect labour \ 20000 Plant facility rent \ 60000 Deprecia tion on plant machinery and equipment \ 30000 Sales commissions \ 40000 Administrative expenses \ 50000 -The following information was gathered for Rogers Company for the year ended 31 December 2018. Budgeted Actual Direct labour-hours 60000 67500 Factory overhead \ 420000 \ 458000 Assume that direct labour-hours are the cost-allocation base. Required a.Compute the budgeted factory overhead rate. b.Compute the factory overhead applied. c.Compute the amount of over/underapplied overhead. _____________________________________________________________________________________________ _____________________________________________________________________________________________

The percentage complete for beginning work in process is used in the weighted-average method.

The equivalent unit concept is a means by which a process-costing system can compare partially completed work done in each of the various process categories to obtain a total measure of work done.

Examples of industries that would use process costing include the pharmaceutical and semiconductor industry.

What source document is used to keep track of direct labour for a job?